Maximizing Profits in Market Structures

Maximizing Profits in Market Structures
Axia College of University of Phoenix

Maximizing Profits in Market Structures
What are market structures? Market structures are different characteristics of a market, including its size and value, the number of providers and their market share, consumer and business purchasing behavior, and growth forecasts. There are different types of market structures and in this paper they will be discussed and how it is possible to maximize profits in them. Varying degrees of competition lead to different market structures. The market structures that will be discussed are monopolies, oligopolies, and competitive market. Each one of these market structures goes a different route to maximize profits.
In a monopoly, there is only one producer/seller for a product. In other words, the single business is the industry. It is difficult to access this type of market because it is very costly and there are other obstacles that may get in the way. Some may be economical, political, or social. An example of this is the government having control over electricity. They want to have sole control over it and be the only entity to have exclusive rights over this resource. Another reason is that a company may have a copyright that prevents others from getting involved such as Pfizer had on Viagra. A monopoly makes its prices based on the market demand. This is because if they raise the price of their good, the consumer will purchase less of it whereas if the monopolist lowers the quantity of the output it sells the price of its output increases. They would prefer to charge a lot for their good and sell a significant amount at that price but because of the market demand curve that is unattainable. In a monopoly, if it produces one good it can be sold at a higher price but once more goods are produced, the price must be dropped in order to sell more. Since all of this is about maximizing their profit, the goal is to increase...